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Taxation of Graduate Level Tuition Benefits

Posted 01/09/2018
Submitted by Tina Berrien
Category: Campus Announcements

The Office of Human Resources Development (HRD) would like to remind our faculty and staff of current regulations regarding taxation of graduate level tuition benefits. Current regulations on employer-provided educational assistance require that the value of graduate-level education benefits taken by the employee in excess of $5,250 within a calendar year be recorded as income to the employee, making them subject to tax withholding.

The IRS allows for an exception to this rule when the graduate course(s) taken by the employee is determined to be work related. University employees taking graduate courses who feel their course is (1) work related; (2) benefits their department; and (3) benefits the University, as defined by IRS guidance, may apply for exemption of taxes associated with the course. Details on graduate course exemptions are detailed on the back of the Application for Tax Exemption of Graduate Level Course form.

To apply for consideration of this exemption, you must complete and submit the Application for Tax Exemption of Graduate Level Course form to HRD no later than two weeks after the course begins. Once a determination is reached, you will be notified in writing. For your convenience, this form can be downloaded from the HRD website forms page at

Employees who receive tuition remission for graduate level courses taken by their spouse and/or dependent child(ren) are subject to tax implications at dollar one of this benefit. The withholding amount will vary depending on the number of credits taken per semester and the employee’s tax bracket. Deductions will be taken directly from the employee’s paycheck during the semester in which the course(s) is taken.

If you have any questions regarding graduate-level education tax, please contact Payroll at or at 860-768-4579.

Thank you.